Fannie Mae has announced that it has executed a new Credit Insurance Risk Transfer (CIRT) transaction, CIRT 2024-L3 which transfers $337.2 million of mortgage credit risk to private insurers and reinsurers.
The covered loan pool for CIRT 2024-L3 consists of approximately 24,000 single-family mortgage loans with an outstanding unpaid principal balance (UPB) of approximately $8.2 billion. Additionally, the covered pool collateral has loan-to-value (LTV) ratios of 60.01%-80%, and was acquired between July 2023 and September 2023. The loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages and were underwritten using rigorous credit standards and enhanced risk controls.
“We appreciate the support of the 27 insurers and reinsurers that committed to write coverage on this deal,” said Rob Schaefer, Fannie Mae VP of Capital Markets.
With CIRT 2024-L3, which became effective May 1, 2024, Fannie Mae will retain risk for the first 170 basis points of loss on the $8.2 billion covered loan pool. If the $139.8 million retention layer is exhausted, 27 insurers and reinsurers will cover the next 410 basis points of loss on the pool, up to a maximum coverage of $337.2 million.
Coverage for this deal is provided based upon actual losses for a term of 18 years. Depending on the paydown of the insured pool and the principal amounts of insured loans that become seriously delinquent, the coverage amount may be reduced at the one-year anniversary and each month thereafter. The coverage on this deal may be canceled by Fannie Mae at any time on or after the five-year anniversary of the effective date by paying a cancellation fee.
Since inception to date, Fannie Mae has acquired approximately $27.6 billion of insurance coverage on $921.6 billion of single-family loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk) and front-end transactions. As of March 30, 2024, approximately $1.33 trillion in outstanding UPB of loans in our single-family conventional guaranty book of business were included in a reference pool for a credit risk transfer transaction.
The latest in risk awareness
Fannie Mae recently completed CIRT 2024-H2, a move which allocated $284.8 million in mortgage credit risk to private insurers and reinsurers. The covered loan pool for CIRT 2024-H2 was comprised of roughly 34,000 single-family mortgage loans with an outstanding UPB of approximately $12.1 billion. Additionally, the covered pool collateral has LTV ratios of 80.01% to 97%, and was bought between May 2023 and September 2023.
Continued stakeholder outreach
Fannie Mae has also released its 2023 Corporate Responsibility and Impact (CRI) Report. The annual report, previously known as the Environmental, Social, and Governance Report, highlights the various actions and innovations that the GSE is taking to support the U.S. housing finance system and the company’s mission to facilitate equitable and sustainable access to affordable housing across America. The 2023 CRI Report connects stakeholders to the company’s mission and provides information on Fannie Mae’s business and operations with a focus on environmental, social, and governance priorities.
According to the 2023 CRI Report, in 2023, Fannie Mae acquired mortgages supporting:
- 805,000 single-family home purchases, which more than one-third were to low- to moderate-income households, and nearly half were to first-time homebuyers.
- 179,000 single-family refinancings, with more than half to low- to moderate-income households.
- 482,000 multifamily units, with a significant majority reported rents affordable to low- to moderate-income households.
- Green MBS which financed 52,000 more-efficient housing units in 2023.
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